Transcript: Nightly Business Report – June 5, 2017

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue
Herera.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Busy week. Stocks don`t
seem to get rattled by much. But could several events change that this
week.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Concerned CEOs. They
represent an important sector of the economy, and today, travel executives
pay close attention to the president`s tweets.

GRIFFETH: Targeting cancer. There`s a shift under way in how researchers
want to treat the disease, resulting in some new success stories.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for this Monday,
June the 5th.

Good evening, everybody. I`m Bill Griffeth, in tonight for Tyler Mathisen.

HERERA: And I`m Sue Herera. Welcome, everybody.

Well, this could be it. A number of events this week, both domestic and
global, could test the market`s resilience. Stocks have been melting up,
trading near record levels, despite some of the recent upheaval and
uncertainty. But in the days ahead, a jam-packed economic calendar,
hearings on Capitol Hill, and elections in Europe have the potential
perhaps to reshape that landscape.

Bob Pisani takes a look at the road ahead for investors.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: On the surface,
everything looks calm for the markets. Major stock indices are at or near
historic highs, volatility is near historic lows and bond yields are at the
lowest levels since the election last November. But two big events on
Thursday could be market movers. First, the British elections, where it`s
still not clear if last weekend`s attack at the London Bridge will swing
sentiment for or against incumbent Theresa May.

Back in the U.S., former FBI Director James Comey will testify before the
Senate Intelligence Committee on how his agency assessed Russia`s role in
the November election. He will certainly be asked if President Trump asked
him to end the probe of former national security adviser of Michael Flynn.

We`ll also have the European Central Bank`s decision on interest rates on
Thursday. Despite a clearly improving European economy, ECB Chief Mario
Draghi is not expected to raise rates or even reduce the size of their
bond-buying program. We`ll watch for any signs for a change in thinking.

Finally, the Fed meets next week, and despite some soft economic data,
recently, traders are betting there is a 96 percent chance the Fed will
raise the rates another quarter point. That would be the third interest
hike since December 2015.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.

(END VIDEOTAPE)

GRIFFETH: And as Bob just mentioned, the British election on Thursday is
on the minds of investors both here and, of course, across the globe. And
it follows the horrific terror attacks over the weekend. The country`s
third in as many months.

Wilfred Frost reports for us tonight from London.

(BEGIN VIDEOTAPE)

WILFRED FROST, NIGHTLY BUSINESS REPORT CORRESPONDENT: A vigil on the banks
of the River Thames to remember those lost in Saturday`s terrorist attack
in London. This as campaigning for the country`s general election once
again heats up after taking a brief pause out of respect for the victims.

THERESA MAY, BRITISH PRIME MINISTER: While it was right that we should
pause to show our respect to those we have lost, and to ensure all our
energies were focused on responding to the immediate aftermath of those
events, it is also right that our way of life and our democratic process
should go on.

FROST: So, it`s no surprise that security has remained top of the agenda,
with just three days left until polling day. Prime Minister Theresa may
has tried to frame her main opponent, Labour leader Jeremy Corbyn, as being
soft on police powers in the past, while he`s hit back, criticizing her for
cutting police numbers when she was home secretary from 2010 to 2016.

JEREMY CORBYN, BRITISH LABOUR PARTY LEADER: You cannot protect the public
on the cheap. The police and security services must get the resources they
need, not 20,000 police cuts.

FROST: Either way, politicians of all sides have increased their rhetoric
on preventing terrorism. Prime Minister May outlining the role of the
Internet played in the attacks.

MAY: We cannot allow this ideology the safe space it needs to breathe.
Yet that is precisely what the Internet and big companies that provide
Internet-based services provide.

FROST: Under the spotlight are messaging services with end-to-end
encryption, like Facebook`s WhatsApp. Recently, the Home Secretary Amber
Rudd described as completely unacceptable that the government could not
read such messages.

Aside from hosting the vigil tonight, London Mayor Sadiq Khan expressed his
anger at the motivations behind the terror attacks.

SADIQ KHAN, LONDON MAYOR: I`m angry and furious that these three men are
seeking to justify their actions by using the faith that I belong to, to
justify their actions. The ideology they follow is perverse. It is
poisonous, and there`s no place in Islam.

FROST: He also said that London would not be cowed by terrorism.

For NIGHTLY BUSINESS REPORT, I`m Wilfred Frost, London.

(END VIDEOTAPE)

GRIFFETH: By the way, following that attack, Facebook (NASDAQ:FB) said it
wants to make its social media platform a hostile environment for
terrorists.

In a statement, Facebook (NASDAQ:FB) said, and I quote: using a combination
of technology and human review, we work aggressively to remove terrorist
content from our platform as soon as we become aware of it, end quote.

And separately, Twitter is also working to tackle the spread of militant
propaganda on its website, saying it has no place on its platform.

HERERA: Meantime, in the Middle East, four Arab states cut diplomatic ties
with Qatar. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt want
to isolate the Persian Gulf Emirate over policies towards Iran and Islamist
political and military groups. That rift was felt in the oil markets as
traders grew concerned that the split could impact the deal to reduce oil
production.

Hadley Gamble has more tonight from Riyadh.

(BEGIN VIDEOTAPE)

HADLEY GAMBLE, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s certainly the
most severe diplomatic crisis to face the Gulf Arab countries since the
GCC`s inception some 38 years ago. The UAE, Bahrain and Saudi Arabia as
well as Egypt calling out Qatar, saying they`ve been supporting terrorism
and they`re closing the borders, blocking air and maritime space with
regional airlines, Emirate, Etihad, Fly Dubai the Saudi Airlines, all
suspending flights as of tomorrow morning.

It`s a country that depends at least 90 percent on imports to make ends
meet. And all of this coming just a few weeks after what is lauded as a
major victory for U.S. President Donald Trump in the region. It was his
first major trip abroad. He came to Saudi Arabia first and talked about
bringing the Muslim world together. Earlier today, we heard from U.S.
Secretary of State Rex Tillerson, saying that the U.S. was open to being a
mediator.

REX TILLERSON, SECRETARY OF STATE: We certainly would encourage the
parties to sit down together and address these differences. And we — if
there`s any role that we can play in terms of helping them address those,
we think it is important that the GCC remain unified. I do not expect that
this will have any significant impact, if any impact at all on the unified
fight against terrorism in the region, or globally.

GAMBLE: It comes at a sensitive time for the United States, with four
major military installations in the Gulf Arab countries. Two in Qatar, and
air base and army base, as well as another air base in Kuwait and the Fifth
Fleet in Bahrain.

For many in the Gulf Arab states, Qatar has had a questionable foreign
policy for years, supporting the Muslim Brotherhood after the Egyptian
revolution back in 2011, as well as Hamas leaders and even hosting a
diplomatic mission for the Taliban.

Another sticking point; the country`s media outlet, including al Jazeera.
Saudi Arabia has often criticized al Jazeera`s coverage as unfair.

But while the geopolitical implications could be the more immediate
problem, a longer term issue will be economic relations in the Gulf.
Shutting down air travel between the UAE, Saudi Arabia, Bahrain and Qatar
could have major implications for the private sector, a group already hit
hard by two years of lower oil prices.

For NIGHTLY BUSINESS REPORT, I`m Hadley Gamble in Riyadh, Saudi Arabia.

(END VIDEOTAPE)

GRIFFETH: And despite these geopolitical tensions, stocks closed with just
modest declines today. One market watcher said that investors were growing
cautious given the upcoming events later this week that we just talked
about.

The Dow, when all was said and done, lost about 22 points, closed at
21,184. The NASDAQ was down 10, the S&P down three.

And with all the major indexes still near records, there seems to be little
that can rattle this market. Mike Santoli takes a look at why.

(BEGIN VIDEOTAPE)

MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The stock market
signature move lately has been the shrug. Stocks seemed to shrug off any
bad news while investors shrug in confusion over why nothing seems to
disturb the rally. Neither U.S. economic growth, terrorist attacks, dimmer
hopes for bold fiscal policy moves and falling treasury bond yields are
among the potential threats that seem not to matter much to stocks lately.

Why might this be? Well, for most of the bull market, low interest rates
have a slow economic expansion, have been converted into decent profit
growth by companies and into rising stock prices by the market. This year,
it`s been more of the same.

Meanwhile, the earnings of big companies are on the rebound. What`s more?
The world remains saturated with cheap money, which continues to find its
way into financial markets. The central banks of the U.S., Europe and
Japan combined continue to grow their holdings of bonds at a brisk clip for
now.

All these factors have allowed investors to take the lack of visible
progress from the Trump economic agenda in stride. Of course, it`s worth
asking, what might be out there to disturb this resilient bull market?

Wall Street veterans are watching the corporate bond market for signs of
any incoming stress. Many long time bond fund managers say they see little
value in this market, though, and overall debt levels on companies books
are quite high. This could place investors on alert for any weakness in
credit markets that might bleed into stocks, as happened in late 2015, and
early 2016.

Now, the potential risk, the market could keep barreling higher for a good
while longer and get the Federal Reserve worried about the hazards of a
financial bubble. Strategists of Bank of America (NYSE:BAC) Merrill Lynch
have argued this could become a growing threat if the S&P 500 would rise
another 8 percent or 10 percent or so fairly soon and the Fed felt it
needed to cool off investigator speculation.

The Feds widely expected to lift short term interest rates again next week
and before then, investors will confront former FBI Director James Comey`s
congressional testimony, a U.K. election, and a European Central Bank
meeting, all of those on Thursday.

If nothing else, these events should test the market`s ability to keep
shrugging off distractions in what has been a relentless upward march.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli at the New York Stock
Exchange.

(END VIDEOTAPE)

HERERA: And Michael Farr joins us to discuss how all of these events could
shape the markets this week. He`s president of the money management firm
Farr, Miller and Washington.

Good as always to see you, Michael. Welcome back.

MICHAEL FARR, PRESIDENT, FARR, MILLER & WASHINGTON: Thank you, Sue. Nice
to be here.

HERERA: You know, we laid out the case of what might be able to influence
stocks. But you say at this point, given what`s lying ahead for the market
this week, investors need to be very cautious.

FARR: Well, and I`ve been saying that for a while, Sue. And geez, I
listened to the list and listened to Rick Santoli and everything else, I
mean, everything was in there except for the kitchen sink. I think of all
of the things that maybe we should be concerned about. You know, stock —
so I get simple when things are complicated.

Stock prices are high. They`ve been high for a long time. We haven`t had
any significant correction in a long time. This is also — I mean, I`ve
heard more people call for a market top than I can even remember. And the
market top just won`t happen.

GRIFFETH: Right.

FARR: So, you get into one of these periods where you say, well, maybe the
market`s never going to go down again and that`s usually when you`re about
to lose.

So, yes, I say be cautious. I think these conditions probably can`t go on
forever. But complacency is really an enemy at this point.

GRIFFETH: You don`t sound like you`re putting money to work right now
then. Is that the case?

FARR: You know, I always am, Tyler. I mean, if we get fresh cash today, I
can`t market time — you know, certainly, the market could go up, continue
to climb, this wall of worry. There is ample cash. And interest rates
continue to be low. But there are still some bargains out there. But I am
really cautious.

And if you look at the returns this year, five stocks: Apple (NASDAQ:AAPL),
Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and
Facebook (NASDAQ:FB) —

GRIFFETH: Right.

FARR: — have produced about a third of the market`s overall return. You
didn`t own those. You`re up about 6 percent. You owned them, you`re up
9.5 percent.

So, leadership is being concentrated. You need to make sure that you know
what you own, why you own it, and that these companies have real earnings
and real balance sheets. I mean, there`s a lot going on this week.
Thursday I`m watching for Comey`s testimony. I think that that could be a
game changer here.

And, of course, you know, we made the mistake last year of presuming that
the Brits wouldn`t vote for Brexit, and they did.

HERERA: Right.

FARR: So, you can never trust a British election.

HERERA: Right. That`s — you know what, it is one of those weeks that has
the danger of being an inflection point, if you will, for the market.

FARR: No question.

HERERA: So, if you are a long-term investor and you have decent gains, in
some of the stocks that you just mentioned, do you take some money off the
table, as almost protection against the whipsaw?

FARR: Yes, I think what you have to do, Sue, when markets get like this,
and you know that it`s — that the risk goes higher, you have to go back to
your investment plan and your asset allocation. Maybe your stock position
has gotten too large. Maybe your goals have changed and you`ve gotten
closer to that time when you should retire and perhaps a little less money
in stocks, a little more money in bonds.

So, check your investment discipline. Make sure that you haven`t moved
outside of your investment policy. And that you can stay with what you
have for five or six or seven years. If you need money for the short-term,
it should not be tied up in long-term investments. Do it now before you
have to.

HERERA: OK, good advice, as always, Michael. Thank you.

FARR: Thank you.

HERERA: Michael Farr with Farr, Miller & Washington.

LEMON: Still ahead, the president calls his executive order a travel ban,
but executives in the travel industry call it something else.

(MUSIC)

HERERA: President Trump is doubling down on his travel ban. In a series
of tweets, the president said it was a mistake to revise the first order he
signed, and suggested the White House should issue a much tougher version.
He tweeted, quote: People, the lawyers and the courts, can call it whatever
they want, but I am calling it what we need and what it is. A travel ban.

The White House and other members of the president`s staff have insisted in
the past that it was not a travel ban.

GRIFFETH: And the president`s tweets are not going unnoticed by the travel
industry. And the renewed talk about a travel ban comes as many high-
profile executives attend one of the year`s biggest hospitality
conferences.

Susan Li spoke to them.

(BEGIN VIDEOTAPE)

SUSAN LI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Call it what it is, a
travel ban. The U.S. president`s also asking for an expedited Supreme
Court hearing on the watered down version of his travel ban and promising
extreme vetting of travelers. A suggest that may deter people from making
trips to the U.S. in the future.

ARNE SORENSON, MARRIOTT CEO: Sometimes these tweets that come out early in
the morning, talking about a travel ban, they are very blunt. There`s no
nuance in it. There`s no welcome in it.

LI: It`s one of the biggest threats to a booming travel industry, with
record tourist arrivals to the U.S. last year, and forecast to grow for the
next five years, according to the U.S. Commerce Department. A longer term
trend that`s being underpinned by global spending.

GUY LANGFORD, DELOITTE VICE CHAIRMAN: People want to travel. People are
valuing experiences today, more so over goods. And so, that trend and
having more middle class travelers in the world today than ever before is
providing part of that resiliency.

LI: Terrorism is another threat to travel. With seven killed and nearly
50 injured in this weekend`s tragic attacks in London, the third in the
U.K. in as many months, tourist numbers to Britain may drop off in the near
term. But won`t impact travel around the rest of the world.

CHRISTOPHER NASSETTA, HILTON CEO: I expect notwithstanding these tragic
events, and they`re terrible for the people of the U.K., that we`re going
to have a reasonably good year, that the impact will be isolated.

LI: In fact, despite over a dozen deadly terrorist attacks in the last two
years in Western Europe, the region was the most popular place to go in
this year`s first quarter — another sign that you can`t keep travelers
away for too long.

For NIGHTLY BUSINESS REPORT, I`m Susan Li at NYU`s International
Hospitality Investment Conference.

(END VIDEOTAPE)

HERERA: At the White House, the president outlined a plan to privatize the
nation`s air traffic control system. Such a move would take the job out of
tracking and guiding planes away from the Federal Aviation Administration.
The president called the current system antiquated and stuck in the past.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: After billions and billions
of tax dollars spent, and the many years of delays, we`re still stuck with
an ancient, broken, antiquated, horrible system that doesn`t work. Other
than that, it`s quite good.

(END VIDEO CLIP)

HERERA: Commercial airlines have long supported the idea of privatizing
air traffic control. And the air traffic controllers union is also
generally supportive of that proposal, saying it could make the system more
efficient. And today`s announcement is part of a broader week-long push to
promote various infrastructure proposals.

GRIFFETH: By the way, things are looking up for the global airline
industry which raised its profit forecast for this year. The International
Air Transport Association which represents more than 200 airlines says it
expects travel demand to increase as the worldwide economy looks to post
its strongest growth in six years.

HERERA: Alphabet breaks a thousand. That`s where we begin tonight`s
“Market Focus”.

Alphabet launched its IPO back in 2004 as Google (NASDAQ:GOOG). And today,
the parent company of the search engine passed the $1,000 threshold, just a
few days after Amazon (NASDAQ:AMZN) did it. Alphabet finished today up a
fraction to $1,003.88.

Nutrition supplement company Herbalife (NYSE:HLF) cut its revenue outlook
for the current quarter, saying its new sales guidelines set by federal
regulators are cutting into results. The company which now sees revenue
falling as much as 6 percent, also cited weakness in its Mexico market.
Herbalife (NYSE:HLF) shares were off nearly 7 percent to $68.99.

During its annual developers conference, Apple (NASDAQ:AAPL) announced
updates to its software and its products. The company plans to offer
Amazon`s prime video service on its Apple (NASDAQ:AAPL) TV platform, and
said it is making improvements to its iPad and MacBooks, and will offer a
more enhanced version of the Siri service on the Apple (NASDAQ:AAPL) Watch.
Apple (NASDAQ:AAPL) was down to $153.93.

GRIFFETH: Medical device maker Dexcom says it saw shares rise after Apple
(NASDAQ:AAPL) said that improvements made to its watch will make it more
compatible with Dexcom`s glucose monitor. Those two products will connect
through Bluetooth. Dexcom shares gained 5 percent on that news to $71.19.

But drugmaker Mallinckrodt shares were hit after known short seller Citron
Research released a report criticizing the company`s top selling
medication. Citron said an executive at Express (NYSE:EXPR) Scripps which
is a distributor for Mallinckrodt called the drug overpriced for its value.
Mallinckrodt shares down 5 percent to $40.49.

Coming up, if you can figure out what makes a cancer tumor tick, can you
then figure out how to treat it? Well, some researchers say yes.

(MUSIC)

HERERA: Toyota (NYSE:TM) quietly sold its entire stake in electric
carmaker Tesla. The sale marks the end of a partnership between the two
companies which was first announced back in 2010. Toyota`s stake amounted
to just under 1.5 percent of Tesla as of last summer. The Japanese
automaker said the sale was part of a regular review of its investments.

GRIFFETH: By the way, if you own a Tesla, you may start paying more for
insurance. National insurer AAA is reportedly raising its prices for
Tesla`s Model S and Model X, citing higher than average claim rates and
repair costs for the two cars. According to automotive news, premiums
could increase by as much as 30 percent.

HERERA: Thousands of doctors, researchers and medical company executives
are meeting at the biggest cancer research conference of the year. And
this year, there`s a big shift in the way cancer is being targeted.

Meg Tirrell is in Chicago.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: For decades, cancer
has been treated with surgery, radiation and chemotherapy. But in recent
years, major strides are being made in targeting drivers of cancer more
precisely. The benefits for that approach were on display at the American
Society of Clinical Oncology meeting this week in Chicago, the world`s
largest cancer research conference.

DR. ROGER PERLMUTTER, MERCK RESEARCH LABORATORIES PRES.: That takes us
away from the general idea of saying, gee, is it a lung cancer, a breast
cancer, colon cancer, but instead to ask the question, does the tumor have
this DNA repaired.

TIRRELL: One major step forward, just weeks before the conference, Merck
(NYSE:MRK) received a landmark FDA approval for its cancer drug Keytruda.
For the first time, a drug was approved based on an underlying driver of
cancer, rather than for the specific location of cancer in the body.

PERLMUTTER: It`s the first time that the FDA has approved a therapy across
many different tumor types, based on a molecular definition.

TIRRELL: That same philosophy led to one of the conference`s major success
stories. Loxo Oncology, a young biotech company with a drug targeting a
rare mutation driving cancer.

DR. JOSH BILENKER, LOXO ONCOLOGY CEO: It`s really almost a key and a lock
phenomena. It`s such a specific, dramatic effect, that the patients know
it right away. They feel better right away. Their symptoms get better
right away.

TIRRELL: But delivering targeted therapies requires that people with
cancer are tested to see what genetics are driving the disease, something
Loxo CEO, Dr. Josh Bilenker, says doesn`t happen frequently enough.

BILENKER: If there`s one takeaway or call to action I would love people to
hear which is, get your tumor tested. Figure out what is making it tick so
that you know what is the right therapy that can be matched to your tumor.

TIRRELL: The conference also brought updates in immunotherapy. A new
class of medicines that unleash the body`s own immune system to better
target cancer. And with all the new advances come new potential costs.
The price of cancer medicines continue to be a theme at the conference.

DR. PETER BACH, MEMORIAL SLOAN KETTERING: There`s been a lot of work
including by ASCO to link the prices of drugs and other treatments to how
well they work. But there`s general resistance to it, because, you know,
companies when they have their product, they want to extract as much as
they can from it, even if it doesn`t provide big benefits to patients.

TIRRELL: As cancer care evolves, so, too, will the question of how to pay
for it.

For NIGHTLY BUSINESS REPORT, I`m Meg Terrill in Chicago.

(END VIDEOTAPE)

HERERA: And that does it for us tonight. I`m Sue Herera.

And we want to remind you that this is the time of year your public
television station seeks your support.

GRIFFETH: I`m Bill Griffeth. We thank you very much for your support.

Have a great evening. We`ll see you tomorrow.

END

Nightly Business Report transcripts and video are available on-line post
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Business Report is not and should not be considered as investment advice.
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